U.S., China vie for oil, allies on new Silk Road

China's first international oil pipeline, buried in the Kazakh steppe, is a milestone for the world's newest empire--one forged not in the name of destiny or God, but in pursuit of the planet's most valuable resources.

From the Himalayas to the Yellow Sea, China's cities are exploding in size. Their factories are filling shelves around the globe. The country's brand-new middle class is buying cars so fast that China is on pace to have more vehicles than America in two decades.

China had enough oil to sustain itself just 15 years ago. Now it is one of the world's thirstiest oil addicts, importing 40 percent of what it needs. Only the U.S. consumes more.

Each new factory churning out goods made in China and each new car on Chinese highways adds to a ravenous appetite for raw materials, not only oil but timber, copper and soybeans. Satisfying that appetite has sent Chinese oil explorers around the world--first into the arms of America's enemies but increasingly to friends as well.

The 19th Century saw the British Empire and czarist Russia jockey for control of Central Asia in a Great Game of global strategy. Today the game is gathering again, this time between China and the U.S., as China makes its biggest push for influence in this oil-soaked region since the days of the Silk Road.

No nation is more in play than Kazakhstan, where China's new oil pipeline snakes for 620 miles and may one day reach the shores of the Caspian Sea.

Once known as little more than a Soviet nuclear proving ground, Kazakhstan has emerged as a test case for how China's economic transformation is redrawing the world's strategic map. Even as Kazakhstan opens the tap on the new Chinese pipeline, it is savoring U.S. attention, drawing a stream of visitors including Vice President Dick Cheney. In September, Kazakh President Nursultan Nazarbayev visited not only the White House but the president's parents at the Bush family homestead in Maine.

"The U.S. is a strategic partner," Energy Minister Baktykozha Izmukhambetov said in an interview, carefully picking his words. "China is also a strategic partner. China has a great future here."

But China's quest for resources is rubbing up against U.S. interests. In the UN, China is protecting energy allies Sudan and Iran against U.S.-led efforts to censure them. To secure its energy supplies, Beijing is expanding its military, venturing farther into the Pacific Ocean and spurring the U.S. to build up its forces in response. The sea is crowding, a realization underscored in October, when a Chinese submarine came unusually close to a U.S. aircraft carrier in the Pacific.

Optimists see a prime chance for cooperation: The world's two biggest oil consumers could team up to find alternative energy sources and deepen naval ties.

Conversely, in an age of indisputably diminishing resources, the two sides may be edging closer to confrontation.

"You have two powers competing over the same sandbox," said Gal Luft, a China expert with the Institute for the Analysis of Global Security in Washington. "As a country of China's size grows, there will be a moment when the moment of reckoning comes."

China's energy diplomacy poses an utterly new challenge to the U.S.: a rival that is growing in stature not by seeking to undo the American rules of the game, but by playing the game more and more like Americans.

"We understand this behavior because we see it in our own system," said Jonathan Pollack, a China specialist at the Naval War College in Newport, R.I. "It is as American as apple pie."

Life in the Kazakh oil patch

Even before the black armored Bentley had rolled to a stop, the front door swung open and a burly bodyguard popped out.

He glowered at onlookers and opened the rear door of the sedan. A relaxed, 50ish man in a powder blue sweater, pale linen jacket and dark sunglasses eased out, nodded to the crowd and slipped into the hotel, trailed by another guard.

No one there could--or would--say who he was, nor did anyone bat an eye. It was a typical scene at the 2006 convention of Kazakhstan's oil and gas market, a toast to the hydrocarbon where billions in petrodollars hang in the balance. The annual trade show in Kazakhstan's commercial capital, Almaty, draws oil executives from around the globe. They huddle over deals and cultivate the official gatekeepers of Kazakhstan's oil trove, which is expected to eventually yield as much as Iran's.

The country bristles with emblems of an oil boom: renovated five-star hotels, new entertainment palaces and shimmering government offices that smell of fresh paint. Astana, the Kazakh capital built from scratch in barely a decade, boasts splashy architectural ornaments such as the glass-pyramid Palace of Peace--all seemingly conceived to transform Kazakhstan from a desolate former Soviet republic into a Dubai-style wonder.

Kazakhstan owes thanks to all the major oil players. The U.S., Europe and, of course, China are vying for a piece of this behemoth nation, nearly four times the size of Texas and home to one of the largest oil fields discovered worldwide in the past 30 years.

By any measure, China is the most vibrant force in town.

In the largest foreign purchase ever by a Chinese company, China National Petroleum Corp. paid $4.2 billion last year for PetroKazakhstan, a Canadian owner of Kazakh oil fields. More recently, China's state-owned CITIC Group announced plans to buy another major Kazakh oil field if authorities agree: the Karazhanbas field on Kazakhstan's western border. It would give China an extra reason to finish extending its new pipeline farther west, tapping oil from beneath the Caspian Sea.

China insists the U.S. should not feel threatened by such moves. "China will never pose a threat to world energy security," China's energy czar, Ma Kai, wrote recently in a Chinese magazine.

Wedged between Russia to the north and China to the east, Kazakhstan traditionally has favored Russia. Trade over the vast Kazakhstan-China border was historically low, slowed by shabby roads and lingering border disputes.

But today, low-cost Chinese goods fill Kazakhstan's outdoor markets.

"We started our relationship with China from scratch. There was no trade between us. Now the trade is booming," said Foreign Minister Kasymzhomart Tokayev, whose office looks out on a forest of cranes in the capital. "It has reached $6 billion, and I believe we have good prospects to increase that."

Nothing will help accomplish that faster than the pipeline China hailed as "the new Silk Road," a reference to the web of trade routes that ferried caravans from China to the Mediterranean for centuries. The pipe now handles 200,000 barrels a day but could carry twice that amount when an extension is completed.

This poses a dilemma for the U.S. Officially, Washington supports any pipeline that expands supply and transportation. Indeed, the U.S. spent years winning Kazakh support for an American-backed pipeline from Azerbaijan to Turkey.

But China's pipeline poses something entirely different: an oil project that helps broaden China's strategic footprint. And that is something the U.S. finds more complicated.

"There is some sense in the U.S. government that as China gets more influential in Kazakhstan, it is more interested in pushing the U.S. out of Central Asia," said Mikkal Herberg, an energy expert at the Seattle-based National Bureau of Asian Research. "So the feeling is: `Yes that's fine if China wants to get energy there, but not if it becomes part of a broader strategic competition.'"

Wang Lingyu's parents never owned a car. But on this day, the 36-year-old small-business man was buying his second.

"Two people need two cars," he said.

Barely three years after Wang and girlfriend Teng Hui bought their first car, they signed for a twinkling ice-blue Volkswagen hatchback last week. At a dealership in downtown Beijing, the $12,500 token of China's surging middle class was ready to roll out onto a boulevard paralyzed with midday gridlock.

For China's Communist Party, finding the oil to satisfy a nation of new car buyers, truck drivers and factory furnaces has become a matter of survival.

Through most of the 20th Century, the Middle Kingdom had little time for foreign policy. Invasions from abroad, internal revolution and tumultuous politics kept the world's most populous country distracted. After Deng Xiaoping unshackled the economy in the late 1970s with his exhortation "to get rich is glorious," China devoted its attention to getting rich.

But over the last decade, its scorching economic growth has driven a soaring need for natural resources. China alone contributed nearly one-third of the global growth in oil demand in that period, adding the equivalent of a medium-size country to world oil consumption each year, according to Herberg, the energy expert.

Where rice paddies stood 20 years ago, factories now guzzle a heavy diet of industrial materials. This past summer, a power shortage forced China to ration electricity to its factories for the fourth year in a row.

These shortages are a chilling sign to China's Communist Party. Leaders believe rapid growth that continues to create new jobs and lift millions more out of poverty is the best way to protect the party's future. If an energy shortage were to disrupt China's economic growth, it could send laid-off workers into the streets and threaten the grip of the party.

That urgency has propelled Chinese leaders, diplomats and engineers around the globe. Since the 1990s, they have used aid and trade to help win oil deals. In less than a decade, China's national oil companies have hoisted flags from Argentina to Kazakhstan.

Even for countries with strong relationships with the U.S., China represents an attractive alternative. Since 2004, three of China's state-owned oil firms have heavily invested in recovering Canadian oil sands. They also have deepened ties with Saudi Arabia.

"This is happening all over the Middle East," said Rashid Mohamed Rashid, the minister of foreign trade and industry for Egypt, the second-largest recipient of U.S. aid after Israel. "In the next seven or eight years, China will be Egypt's No. 1 trading partner. These are not just short-term deals. This is a long-term relationship that is being established."

The vast majority of that trade is one-way--consumer goods from China. Egypt has little in the way of natural resources that China needs. Yet Cairo hopes to promote its country as a gateway to markets and assets in Africa and the Middle East.

China has even tried to enter the U.S. market. In June 2005, Chinese oil company CNOOC Ltd. attempted to buy California-based Unocal Corp., but Congress recoiled and killed the deal. CNOOC withdrew.

But Chinese oil executives didn't scale back their ambitions. By last April, they had signed 139 deals around the world, according to a University of Michigan study.

That is the cost of keeping China's middle class happy enough. Holding gas prices within reach is the government's end of the bargain, allowing China's yuppie buyers, like Wang and Teng, to choose a zippy German car over a dowdy Chinese fuel-sipper.

"Since this is our second car," Teng said, "we're getting pickier."

Family cars are only part of the problem. Air travel is thriving, diesel-powered cargo trucks are plying new highways and generators are being used to keep factories running during electrical blackouts--a relentless demand that keeps China asking where it will find its next hit of oil.

The new Great Game

In August 2003, the U.S. and allies were scrambling to get control of Iraq and unlock its vast oceans of oil for world markets.

So no one much noticed when another alliance in a different oil-rich part of the globe flexed its first military muscles: Here on the Kazakh plateau, Chinese troops launched their first multilateral military exercises with Russia and two other former Soviet republics.

Since then, China has held more exercises with Russia and Kazakhstan. The allies also christened a joint anti-terrorism center in Uzbekistan, and China unveiled plans for an $87 million campus to train Central Asian police in battling "separatism, terrorism and extremism."

China also has nurtured an unlikely new powerhouse, the Shanghai Cooperation Organization, a once-obscure diplomatic grouping that has emerged as an alternative to the financial and political institutions of the West.

Critics dust off Cold War-era labels to warn of a "new Warsaw Pact." But the reality is something different: a more perfect union for the age of oil.

The group's six members--China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan--unite some of the planet's largest producers with one of its largest consumers.

The group does not shy from flouting the West. In May 2005, less than two weeks after Uzbek troops killed protesters in the eastern city of Andijan, drawing the ire of Western powers, Beijing greeted Uzbek President Islam Karimov on a state visit to China with a 21-gun salute.

Likewise, as the U.S. rallied support for sanctions against Tehran last June, Iranian President Mahmoud Ahmadinejad used a speech to the Shanghai-based organization to extol a future in which "we should remove the word `sanctions' from the political literature of the world."

The group's boldest move came in July 2005, when it called for the U.S. to remove its military bases from Central Asia. Before long, the U.S. withdrew from Uzbekistan, and Washington is struggling to keep an air base in Kyrgyzstan.

"They have begun all the kinds of programs that other organizations like the EU carry out: training, economic assistance, humanitarian assistance," Roberts said. China, a single-party authoritarian state, even helped monitor elections in Kyrgyzstan in February 2005, he noted.

The White House is fond of Kazakh President Nazarbayev. Though the U.S. State Department and human-rights groups accuse him of suppressing opposition, Pentagon planners appreciate a relatively moderate Muslim leader who has allowed NATO planes to fly over his country to Afghanistan. He also is the only Central Asian leader to have sent troops to Iraq.

Some in Washington believe that China's thrust into Kazakhstan threatens America's foothold.

"Today all these interests are under attack, and the U.S. policy in Central Asia is embattled and under siege," Stephen Blank, a Central Asia expert in the Strategic Studies Institute of the Army War College, said in testimony to a U.S. House committee in July.

Not everyone agrees that China's gain is America's loss in Central Asia. But there is no doubt that things are getting more congested in some of the world's most coveted territory--both on land and at sea.

Crowded waters

China's oil security comes down to a fragile reality: Four out of every five barrels it consumes pass through the Strait of Malacca, a single, pirate-ridden ocean choke point between the Indian Ocean and the South China Sea.

President Hu Jintao declared two years ago that the dangers of the strait required an urgent search for alternatives. Chinese analysts dubbed it the nation's "Malacca dilemma."

Chinese leaders fear that those shipping routes are a weak link in their political lifeline. In the event of a crisis with the U.S., American naval ships could shut down China's oil supply.

The fear has rippled through defense circles. Last May, Gen. Xiong Guangkai, a former deputy chief of staff, told an international conference on energy security that "in the long term, the strategic race for the world's energy may result in regional tension and even trigger a military clash."

To avoid the seas and the perilous straits, China has examined a range of options from the plausible to outlandish, including pipelines to Burma and Pakistan or even a Panama-style canal across Thailand.

Most of those ideas will never leave the drawing board, but another strategy already is under way: a major military modernization that is transforming China's armed forces, a buildup that "already puts regional military balances at risk," according to the Pentagon's 2006 assessment of China.

A sober calculation of national economic and political interests is driving Chinese naval ships back onto the high seas at their greatest strength since the 17th Century. Over the past two decades, China has expanded its arsenal of ballistic and cruise missiles, submarines and aircraft.

"It is an effort by the Chinese to say we have come of age," said Tai Ming Cheung, an expert on the Chinese military at the San Diego-based Institute on Global Conflict and Cooperation.

China is not expanding its military to antagonize the U.S., Western analysts say. On the contrary, Beijing has little incentive to provoke a costly arms race or a far more advanced military opponent.

Despite double-digit growth in recent years, China's military spending remains a fraction of America's half-trillion-dollar defense budget for 2007. (Officially, China says its military budget is $35 billion this year, though U.S. officials speculate actual spending could be nearly three times that amount.)

Nobody, it seems, is more eager to defuse tension with China than the U.S. commanders who have responsibility for the Pacific.

"We don't have a good sense of how they envision the use of that navy and where the navy will be going in the future," said Adm. Gary Roughead, commander of the Hawaii-based U.S. Pacific Fleet, during a visit to Beijing in November.

Roughead and Adm. William Fallon, chief of the U.S. Pacific Command, are trying to improve naval relations with China. In September, two Chinese navy ships visited Pearl Harbor and San Diego for a joint search-and-rescue exercise.

The cooperation is intended to help avoid inadvertent incidents. On Oct. 26, a Chinese submarine surfaced close to the USS Kitty Hawk while the carrier was doing exercises in international waters near Okinawa. If the Kitty Hawk had been practicing anti-submarine drills, Fallon said later, the incident could have escalated into "something that was very unforeseen."

Along with building its navy, China is asserting itself more strongly beyond Asia as well.

From Jamaica to Brazil, China has dispatched about 20 military delegations to Latin America in the past two years. Beijing is winning influence by "offering resources to cash-strapped militaries and security forces with no strings attached," in the words of U.S. Army Gen. Bantz Craddock, commander of the Miami-based Southern Command, which covers Latin America.

More Latin American military personnel are going to China for training, Craddock told the House Armed Services Committee. And the traffic moves the other way as well, with Chinese officers and non-lethal equipment going to Latin America.

Hunger on the horizon

Looming above the Kazakh plains, hours from anywhere, five new oil-storage tanks form a steel skyline.

Construction crews swarm around them, welders' torches flaring and dump trucks trundling back and forth. The workers are racing to expand the Atasu pumping station, the beating heart of China's treasured pipeline.

It is another distant outpost along China's new horizon. With its economy on pace to surpass that of the U.S. by 2050, China will have to find more places like this, just as it will have to find more sources of corn, pork, fertilizer, coal, steel, wool, copper, cement and timber. The great reach of China's rise has already touched the forests of Papua New Guinea, the air over San Francisco and the oil fields of Kazakhstan.

And if all goes as planned, these hulking new tanks will soon hold as much as 628,900 barrels of crude--enough to satisfy China's craving for barely two hours.

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Kazakhstan's ethnic Uighurs feel pressure of petro-politics

By Evan Osnos, Tribune foreign correspondent

ALMATY, Kazakhstan

On this city's dusty edge, China's rise echoes through the dilapidated Soviet-era apartment blocks that are home to a wary community of Uighurs, a mostly Muslim ethnic group.

The Uighurs' fate in Kazakhstan has become entwined with the politics of oil. China's burgeoning appetite for petroleum has given it unprecedented sway with Kazakhstan to crack down on Uighurs who challenge China's regime.

"We are under heavy pressure," said Uighur political leader Kakharman Khozamberdi, who lives in Almaty. "I would like to organize meetings, but I am prohibited from doing that."

For half a century, China has waged a war within its own borders to stamp out a Uighur campaign for greater autonomy in the predominantly Uighur Xinjiang region. China calls that resistance, which has flared with protests and bombings, its No. 1 terrorist threat.

China's "strike hard" suppression of Uighurs has drawn criticism from human-rights groups and fueled a stream of refugees to Kazakhstan and other border nations, where China fears the refugees lend support to dissent at home.

Uighers contend that the newly expanding China is encouraging Kazakhstan to adopt Beijing-style treatment of opponents.

Khozamberdi said he is allowed to speak publicly only at Uighur funerals. So he never misses one.

"I take every opportunity to talk," he said.

Until the late 1990s, Kazakhstan permitted pro-Uighur groups a window of political mobility. Uighur-language newspapers could criticize Chinese rule.

That changed abruptly, say refugees as well as Kazakh and U.S. experts. Kazakhstan and China announced an agreement in 1999 not to tolerate "separatist groups" from the other country. Since then, all major Uighur political organizations have stopped working. In 1998, Kazakh state television broadcast Uighur-language programs three hours each week; today it has been reduced to 15 minutes a week.

The Sept. 11 terrorist attacks also changed the Uighurs' fortunes. Afterward, Beijing released a report alleging links between Osama bin Laden and a militant Uighur separatist group. In August 2002, lobbied by Beijing, the Bush administration froze the group's U.S. assets.

Kazakhstan does not track the number of Uighur refugees it receives. But community leaders estimate that about 500 Chinese Uighurs are there at any one time, on the fringes of Kazakhstan's ethnic Uighur population of 220,000.

Kazakh authorities do not grant political asylum to Uighurs "due to political concerns," according to a UN High Commissioner for Refugees report.

Kazakhstan has extradited an unknown number of Uighurs to China, over the protests of international human-rights groups, which say returnees are likely to face torture or execution.

On March 8, a Chinese-born Uighur cell phone salesman named Yusuf Kader Tohti, 34, was arrested near Almaty and charged with immigration violations, said his wife, Gulnas Kurbanova. Two months later, investigators told her that her husband had been returned to Chinese authorities. She has not heard from him since.

"I don't know if he is alive or dead," said Kurbanova, 24, tears spilling down her cheeks in a park in downtown Almaty. "I don't know anything."

Amnesty International has asked for information on Tohti's and other cases but has not received it. Kazakh officials dispute that Chinese ties have led to greater pressure on Uighurs, yet they emphasize the importance of a closer relationship with China.

"On security," said the Kazakh energy minister, Baktykozha Izmukhambetov, "we have total understanding of each other."

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